Streamlining cross-border trade with Single Window Systems

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Streamlining cross-border trade with Single Window Systems

Cross-border trade has always been at the effect of bureaucratic delays and ‘red tape.’ This has necessitated and thereby resulted in the evolution of ‘Trade Facilitation’ for the global trading system. Simply put, Trade Facilitation (TF) is the simplification, modernisation and harmonisation of the global import and export processes. And, increasingly modernisation translates to digitalisation of processes.

The landmark Trade Facilitation Agreement (TFA) by the World Trade Organisation (WTO), which came into force on 22 February 2017, includes requirements for expediting the movement, release and clearance of goods, including goods in transit. The Agreement also lays down measures for cooperation amongst Customs and other TF authorities and issues of Customs compliance. Additionally, the TFA has provisions on technical support and capacity building in Trade Facilitation.

As per the WTO, Article 10.4 of the WTO TFA calls for Member States ‘to endeavor to establish or maintain a single window, which enables traders to submit documentation and/or data requirements for importation, exportation, or transit of goods through a single-entry point to the participating authorities or agencies.’

Possibilities and benefits of Single Windows

There is no standard structure of a Single Window (SW), since operators customise their systems based on their specific national/regional requirements and conditions. The state could be financing the SW (Finland, Sweden, United States), or it could be financed by the private sector (e.g. Guatemala, Germany) or a private-public partnership may finance it (e.g. China, Malaysia, Mauritius, Senegal, Singapore).

The use of Single Window facilities can be mandated (Finland, Guatemala, Mauritius, Senegal) or it could be on a voluntary basis (China, Germany, Malaysia, Sweden, United States). The services provided under the SW could vary and could be free of charge (Finland, Sweden, United States) or be based on various payment schemes (Guatemala, Germany, China, Malaysia, Mauritius, Senegal, Singapore).

Regardless of the above differences, a huge majority of the participating countries speak highly of their experience with Single Window Systems. And all in all, the benefits and revenues of Single Window Systems, outweigh the establishment/operational costs across the board.

A Single Window provides substantial gains to all stakeholders in the cross-border trade ecosystem. A few of the benefits of single window include:

  • Border clearance performance
  • Trade visibility
  • Integrity
  • Transparency
  • Ease of Doing Business
  • Correct Revenue Yield

Governments across the world have benefitted from Single Windows. Some benefits for government include – Correct revenue yields, Improved trader compliance, SWs enable the use of sophisticated “risk management” techniques for control and enforcement purposes and More effective and efficient deployment of resources.

From the point of view of trade, some benefits include – Cutting costs through reducing delays, Faster clearance and release, Predictable application and explanation of rules, and More effective and efficient deployment of resources.

And, the numbers speak for themselves. After the introduction of SW in Singapore, the processing time for trade documents went down from 4 days to 15 minutes. To lay the groundwork for SW, Thailand has implemented procedural reforms and customs modernization. These reforms have removed superfluous processes and decreased the number of days for exports from 24 days (in 2006) to 14 days (in 2009). In the Republic of Korea, the total savings from the use of uTradeHub for businesses (an automated information transaction system) are estimated to be 1 billion and 818.9 million USD. In Hong Kong, China the annual cost savings through their automated information transaction system are estimated to be about HK$1.3 billion.

Some of the key benefits of the DTTN to the trading community and the HKSAR Government include – improved operational efficiency, enabling new business opportunities, integration on global initiatives, shielding the industry from frequent upgrades and many more.

Single Window Systems that spell success

With the potential of upping a country’s ‘Ease of Doing Business’ index and ‘Logistics Performance Index’, Single Window Systems are definitely here to stay. Already there are a plethora of other success stories of Single Window Systems across the world.

Hong Kong

One of the success stories of Single Window Systems is Tradelink Electronic Commerce Limited (Tradelink), a Single Window to the Hong Kong Special Administrative Region (HKSAR) Government for the Hong Kong trading community. Tradelink started production operations in 1997 to exclusively process specified Government trade documents. Tradelink now processes more than18 million documents each year and caters to over 53,000 customers across the Hong Kong trading and logistics community. In 2003, the HKSAR Government expanded on the Single Window Business-to-Government concept to create a Single Window for any commercial organization to all their trading, logistics, financial business partners as well as Government – The Digital Trade and Transportation Network (DTTN). Some of the its benefits include – improved operational efficiency, enabling new business opportunities, integration on global initiatives, shielding the industry from frequent upgrades and many more.

Over the years the Logistics Performance Index (LPI) Ranking and Ease of Doing Business Ranking of Hong Kong has evolved. Its LPI Rank in 2018 was 12, from a distant 8 in the year 2007. And, its Ease of doing business Rank in 2018 was 4, from a 3 in 2008.

Senegal

Another success story in the area of Single Window Systems is that of the West African nation – Senegal. The Senegalese Single Window – ORBUS – was created for these objectives:

  • Reduction of customs clearance time-limits
  • Reduction of customs clearance costs
  • Improve quality of the service offered to importers and exporters
  • Elimination of red tape

In 2002, GIE GAINDE 2000 was formed in order to finalize the project and to run the system. Some of the problems solved by the system included – Coordination between stakeholders, Reliability of transactions and Improvement of competitiveness. The system has been built on a technological infrastructure and makes available a variety of services.

Trade facilitation, in general, results in optimal processing times and thereby cost reductions. So far, the indicators for Senegal seem to point towards these two objectives being met. Over the years the Logistics Performance Index (LPI) Ranking and Ease of Doing Business Ranking of Senegal has wavered. Its LPI Rank in 2018 was 141, from 101 in the year 2007. And, its Ease of doing Business Rank in 2018 was 141, from 152 in 2008.

Sweden

For the European nation of Sweden, the primary initiatives for establishing a true Single Window were started in 1989. Today, their Single Window offers services to customers engaged in foreign trade and with demands for licences. Each year, over 94% of all the Customs declarations are sent electronically. The Swedish Customs Information System manages over 100,000 electronic messages each day. Approximately 12,000 companies and 7,000 citizens are the beneficiaries of the Single Window services made available by Swedish Customs. Some of the benefits to the stakeholders of the system include – Seamless processes, higher quality/less error, reuse of information and quicker handling from the public services are the main benefits.

Over the years the Logistics Performance Index (LPI) Ranking and Ease of Doing Business Ranking of Sweden has gained significant ground. Its LPI Rank in 2018 was 2, from 4 in the year 2007. And, its Ease of doing Business Rank in 2018 was 12, from 17 in 2008.

Another related success story is that of Mumbai’s Chhatrapati Shivaji International Airport. It is India’s busiest airport and an international Cargo hub dealing with over 1.43 million metric tons of Cargo per annum, 2000+ agents, 200+ airlines and a document volume in excess of 6,000 daily. Based on Kale Logistics Solutions’ in-depth industry knowledge and technical expertise, they were chosen as the technology partner by MIAL. GVK MIAL AIR EXCHANGE (GMAX), a web-based Community System was launched as a joint initiative between Kale Logistics Solutions and MIAL. GMAX became India’s first airport Cargo community platform. It brought about digital transformation in the way stakeholders interacted with each other while moving shipments out of Mumbai. The adoption of GMAX brought about several transformational benefits to MIAL’s stakeholder value chain. The tangible benefits, both on the functional, operational and financial parameters brought about by GMAX made it a standard system for MIAL’s cargo operations.

In conclusion…

With regards to the efficacy of Single Window Systems, the writing on the wall is clear. National single window systems, without a doubt, lay the foundation for enhancement of effective border clearance performance. Metaphorically speaking, Single Window Systems could serve as a ‘Trojan Horse’ to counter institutional resistance to digitalisation, cooperation and change. Single Window Systems streamline and digitalise processes to eliminate bottlenecks of legacy paper-based systems and siloed infrastructure. As a tool in the Trade Facilitation arsenal of a country, these systems are a transformational force to reckon with.